Correlation Between Microsoft and Aena SA
Can any of the company-specific risk be diversified away by investing in both Microsoft and Aena SA at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Microsoft and Aena SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Aena SA, you can compare the effects of market volatilities on Microsoft and Aena SA and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Microsoft with a short position of Aena SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Aena SA.
Diversification Opportunities for Microsoft and Aena SA
Significant diversification
The 3 months correlation between Microsoft and Aena is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Aena SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aena SA and Microsoft is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Microsoft are associated (or correlated) with Aena SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aena SA has no effect on the direction of Microsoft i.e., Microsoft and Aena SA go up and down completely randomly.
Pair Corralation between Microsoft and Aena SA
Given the investment horizon of 90 days Microsoft is expected to under-perform the Aena SA. In addition to that, Microsoft is 2.02 times more volatile than Aena SA. It trades about -0.01 of its total potential returns per unit of risk. Aena SA is currently generating about 0.15 per unit of volatility. If you would invest 20,180 in Aena SA on November 3, 2024 and sell it today you would earn a total of 660.00 from holding Aena SA or generate 3.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 90.91% |
| Values | Daily Returns |
Microsoft vs. Aena SA
Performance |
| Timeline |
| Microsoft |
| Aena SA |
Microsoft and Aena SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Aena SA
The main advantage of trading using opposite Microsoft and Aena SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Aena SA can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Aena SA will offset losses from the drop in Aena SA's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Adobe Systems Incorporated | Microsoft vs. Crowdstrike Holdings |
| Aena SA vs. Technomeca Aerospace SA | Aena SA vs. Borges Agricultural Industrial | Aena SA vs. Home Capital Rentals | Aena SA vs. Arrienda Rental Properties |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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